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Blog & Resources Camargo Blog May 17th, 2017

Due Diligence Assessment: Determining a Drug Product’s Potential Value

Due Diligence Assessment: Determining a Drug Product’s Value

The risk involved with an asset needs to be assessed before a sale. Whether from the buy or from the sell side, it pays to understand how much an asset is worth.

For those involved with in-licensing or out-licensing, a properly performed Due Diligence Assessment places a more accurate value on the asset and provides insights essential for success before the transaction.

One major consideration to reduce risk is in understanding which regulatory pathway applies to an asset and whether it could be suited to the 505(b)(2) regulatory pathway, which can drastically reduce research and development timelines and cost.

Considerations in a Due Diligence Assessment

When a Sponsor does not yet own a product, but is considering in-licensing it from another company, a Sponsor needs to understand whether the clinical studies have been conducted in a way the FDA will accept for NDA approval. In order to make that determination, the Due Diligence Assessment must rely on the current understanding and frequent interactions with the Agency to make a proper and accurate assessment.

If a product can be both in-licensed and approved under the 505(b)(2) pathway, some of the time and development required can be drastically reduced. However, for in-licensing to be a sound decision, the Sponsor must be sure that the requirements for further development of the product for marketing align with the Sponsor’s timeline and budget goals.

Another aspect of risk mitigation is to properly evaluate the chemistry, manufacturing, and controls (CMC) aspects of the product to ensure that the proper certifications, processes, and documentation are in place and comply with current CMC regulations. As we have blogged previously, CMC aspects of a drug development program are important at every stage, and deficiencies can result in setbacks such as clinical hold at the IND stage and additional review cycles at the NDA stage. Regardless of whether the product will be approved via the 505(b)(1) or 505(b)(2) pathway, the CMC requirements remain the same and can be major hurdles to drug development and approval.

What May Be a 505(b)(2) Now, May Not Be Later: A Case Study

The drug development landscape is continually expanding and because the FDA’s draft guidance documents are released infrequently, frequent and current interactions are needed with the FDA in every division to ensure that a regulatory strategy is appropriate. Furthermore, in order to be successful in the regulatory aspect of 505(b)(2) drug development, a Sponsor needs to be aware of new and upcoming regulation changes and guidances that could affect drug development pathways. This was apparent in the following case study.

A Biotech company approached Camargo to do a due diligence assessment on a potential product and advise whether this product would be regulated in the United States as a 505(b)(2) or 505(j) drug product. Through a due diligence assessment of the potential product it became clear that because the formulation of the product was slightly different than a currently marketed product, the 505(b)(2) pathway would be applicable. However, because this was a protein product, the timeframe for this drug to be approved via the 505(b)(2) pathway was finite.

As we have previously blogged, the “deemed to be a license” provision of the Biologics Price Competition and Innovations Act states that certain protein products currently approved as drugs will cease to be NDAs on March 23, 2020, and will be newly regulated as Biologics License Applications (BLAs). Therefore, this potential product faced a limited timeframe for approval through the 505(b)(2) pathway.

After this deadline, the current regulatory guidances indicate that the only pathway for approval of this potential drug would be as a biologic. Compared to NDAs, BLAs have different regulatory requirements for approval and, depending on what studies a Sponsor has conducted and what information may be available to rely upon, could significantly extend the approval timeline. In this case, Camargo brought to light information that the company had not previously considered, and was able to provide valuable insight into the risks involved with in-licensing and developing this product.

Strategic Development from Product Concept to NDA

With experience leading more than 1100 Agency meetings, and deep knowledge of regulatory pathways, as well as clinical, nonclinical and Chemistry, Manufacturing, and Controls (CMC) requirements for approval, Camargo is the most qualified in-house team of experts to help Sponsors with due diligence. A Camargo Due Diligence Assessment is scalable in scope to meet specific needs. Camargo assesses regulatory questions based on a Sponsor’s goals, including whether the product qualifies for the 505(b)(2) pathway or would be better suited to approval via the 505(b)(1) [NDA] or 505(j) [ANDA] pathways (or biologic), and help Sponsors make informed business decisions based on specific needs and goals.

For more information on Camargo’s due diligence services or other strategic development capabilities, contact us.

Author: Johannah Sanchez-Adams, PhD, Research Scientist, Camargo Pharmaceutical Services



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Camargo Pharmaceutical Services provides comprehensive drug development solutions, specializing in customized programs including the 505(b)(2) pathway.


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